As for the option to return to the US, again I present the analogy of a Californian moving to New York. Why should a transplant pay for the upkeep of a state they left years ago?

California and New York are sub-national units, citizens of both pay taxes to the federal government and can move between them at will. There is no benefit to 'Californian citizenship' that a US citizen living in New York retains. All of the privileges and immunities of state citizenship are available to citizens of every state.

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The protection argument has merit, but don't most countries already do this with their citizens regardless of how they're taxed? It's not like the US spends a lot of money protecting its citizens abroad.

Actually we do spend a fair amount, maybe not on a regular basis, but when it is necessary -- military evacuations from war zones are expensive. Again though the optionality argument is much stronger in my mind. If you want the flexibility of US citizenship it's fair to pay for it.

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Again, I don't want to give up my citizenship and fortunately, my case is not so onerous that I feel forced to make that decision. I just wish that laws to catch tax evaders didn't have to impact millions of law-abiding ex-pats too. I'm all for catching criminals, but FATCA is too far reaching, IMO.

If countries like your new home didn't make it so easy for tax cheats, then the countermeasures wouldn't be so onerous.

Case in point, raihanan, above.. he turns the conversation about large scale tax evasion into sob stories of the poor expat, when this is not the conversation. We are talking about US residents, off shoring their money while they live here, in a pure evasion. Same with the corporations you mentioned.

If only the law made that distinction too. It doesn't, and that's the problem.

I really cannot drum up any outrage on your behalf.

And the US spends a shitload to have a robust set or resources overseas for its citizens. Embassies, consulates, military. Even most of our trade agreements that make it profitable to live and work overseas. Don't kid yourself. You are the beneficiary of a lot of money spent.

Case in point, raihanan, above.. he turns the conversation about large scale tax evasion into sob stories of the poor expat, when this is not the conversation. We are talking about US residents, off shoring their money while they live here, in a pure evasion. Same with the corporations you mentioned.

If only the law made that distinction too. It doesn't, and that's the problem.

I really cannot drum up any outrage on your behalf.

And the US spends a shitload to have a robust set or resources overseas for its citizens. Embassies, consulates, military. Even most of our trade agreements that make it profitable to live and work overseas. Don't kid yourself. You are the beneficiary of a lot of money spent.

We'll just have to agree to disagree on the bennies the US provides to expats. It's not that much, and besides, I pay for it too.

If you don't think a law which unfairly targets a lot of law-abiding citizens is a problem, then I don't know what this thread is for. Everyone already agrees that catching tax cheats is good. No need to have a debate about that.

Case in point, raihanan, above.. he turns the conversation about large scale tax evasion into sob stories of the poor expat, when this is not the conversation. We are talking about US residents, off shoring their money while they live here, in a pure evasion. Same with the corporations you mentioned.

If only the law made that distinction too. It doesn't, and that's the problem.

I really cannot drum up any outrage on your behalf.

And the US spends a shitload to have a robust set or resources overseas for its citizens. Embassies, consulates, military. Even most of our trade agreements that make it profitable to live and work overseas. Don't kid yourself. You are the beneficiary of a lot of money spent.

Also our agreements for relatively easy travel on a US passport to dozens of countries.

raihanan, you are paying for it. And you benefit from it. You are not being singled out for anything. You are paying the higher of US or foreign taxes, with a large exclusion, or deducting all foreign taxes. To be subject to US taxes while overseas, you have to be making more than the median salary by a pretty healthy amount.

You are getting the benefits, which are very substantial, justifying the complaints by saying you pay for it, while not wanting to do so. Quit the whining.

Personal tax matters aside, my real problem (or whining, as you put it) is that FATCA is supposed to be about catching tax cheats, but it's flawed and the collateral damage is making it very difficult for ex-pats to do banking in their host countries. For example, I cannot change banks or open any new accounts anymore because it's nearly impossible for Americans to open bank accounts. None of the banks want to deal with Americans due to the FATCA overhead. Some banks (like mine) do it as a service for their existing customers, but if you're not already in the system, then too bad for you. I'm sure you realize this, but not all ex-pats are disgruntled with their governments. Many are working at overseas subsidiaries, or in diplomatic roles, etc... This clumsy attempt to catch tax cheats is ensnaring a bunch of regular people who perform useful roles to American interests abroad.

That is unfortunate, but it's a function of those banks wanting to continue to act as tax havens for other countries, but not wanting to piss off the US. They want the Russian mobster money, and the Middle East corrupt politician money, but can't do that and service US accounts at the same time. Be mad at your banks for wanting to continue with their aiding criminals and corrupt officials.

raihanan:Can you suggest an alternate method that is as effective or better at catching tax cheats while less inconvenient to non-tax cheating ex-pats? It seems as though you got us off on a tangent from the specific flaws that may exist in FATCA with your idea that ex-pats shouldn't have to pay taxes at all, but I'd gladly go back to the former issue.

I think having an exception for people who maintain bank accounts in their country of work or residence would be a good start. That would be a simple and effective way of avoiding much of the collateral damage, yet still address the primary goal. It's not like tax cheats are actually working or living in the Cayman Islands, Cyprus, or other notorious tax havens.

I don't see why there should be a difference. How are the banks to know who is a resident or not? And won't all of these havens then adjust their residency rules to be extra inclusive? It's all or nothing. Just because others cheat more, you should not have the opportunity to cheat a little. The banks would prefer it if everyone could cheat, but if that is not possible, they will take what they can get.

I think having an exception for people who maintain bank accounts in their country of work or residence would be a good start. That would be a simple and effective way of avoiding much of the collateral damage, yet still address the primary goal. It's not like tax cheats are actually working or living in the Cayman Islands, Cyprus, or other notorious tax havens.

It's not a bad idea, except there is a history of tax evaders moving to tax havens, particularly in the Caribbean (because of how close it is to the US) and Switzerland (not sure why exactly).

That said, maybe a white list would be a good place to start. Countries that cooperate on issues of money laundering, tax evasion, and terrorist financing could be put on the list and citizens living and working in those countries could have lessened disclosure requirements.

That would mean upending their gravy train. That would never happen. It sounds great until it runs into the facts on the street. The disclosure requirements were passed because these banks and governments aided criminal behavior.

Many offshore tax havens already have tax treaty agreements with other government to share banking information if requested. The catch is though, that the other country has to make the request on an individual basis, and they only usually do this if they have specific evidence that someone is hiding money in a specific place, which would be rare. In other words, its still very easy to hide the money with little risk.

FATCA applies to all foreign banks with American clients, not just tax haven banks. Residency is easy to prove for individuals, so that's not a big loophole. Residency for shell corporations is more difficult, so maybe corps could be subject to a different criteria. To close the loophole of tax cheats living abroad, limits could be placed on the maximum amount in these accounts for residents. That is, FATCA could apply to all non-residents as well as those residents with more than, say, $500k. Most ex-pats will not be encumbered by this, but serious tax evaders hiding millions would be, regardless of where they live.

Keep in mind that having FATCA exceptions doesn't mean ex-pats are free to do small scale tax evasion. Americans still have FBAR requirements as well as tax filings. Yes, some small stuff can still slip through the cracks, but the alternative is having foreign banks closing their business to Americans which would hurt American interests abroad. It's a trade-off. It's not perfect, but there's no perfect solution anyway.

Yes, it's $10,000 for the FBAR reporting and that's total, not per account. So if you have $5k in one account and $5k in another, you have to report all your accounts to the IRS (accounts of spouses and dependent kids included, even if they're not American). I could understand it better if I lived in the U.S. and maintained these foreign accounts, but when it's your local bank and you work full time and provide for your family, that's way too low. As far as I know, it's not really helping to prevent tax evasion either.

I'm not sure where or why they came up with $10,000, it does seem a bit low to me though. (Maybe to be equal to the cash transaction limit?)

I'm not about to go digging through the legislation history to track it down, but it would not surprise me at all (in both cases) if it was a hardcoded value from 30+ years ago that no one has bothered to update.

It makes it harder to offshore income gained through illicit means, including off the books income from cash only businesses. While the big boys are major violators, tons of small business people are just as guilty, and funnel US profits into overseas assets that that then try to hide.

Some changes to tax law would make it far more difficult for citizens of the big countries to use tax havens as would increased enforcement budgets, but I think you could also put some of that tax enforcement budget into computer systems that aggregate financial disclosures and state based corporate filings. Along with some predictive software, you could probably identify a lot of tax cheating indirectly. It would also be useful for detecting ponzi schemes. Basically take the relatively random suspicion/hunches out of the preliminary investigations of financial and tax wrongdoing and stop relying so much on people making complaints. Another good source of information would be divorce proceedings since a lot of these off-shore accounts are used to avoid disclosing wealth to a spouse.